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Schedules I & J Concerns

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  • #16
    Chrysalis Not at all! Good discussion. I only put $475 down for food (family of 5 but oldest daughter rarely eats at home -- college). We're truly in a pretty desperate financial situation, so all budget categories have been cut. I'm making my family eat leftovers and I'm buying less packaged food. This is really better for our diet and forcing us to get creative. For example, youngest daughter has learned to make scrambled eggs ;) And I'm very thankful for a neighbor with chickens who sells us a dozen free-range eggs for $1! New habits aren't easy to form, but we are doing a better job than I anticipated!

    Comment


    • #17
      Originally posted by justbroke View Post
      The bankruptcy code adopted these numbers directly from the IRS Financial Collection Standards (FCS). The UST's Means Test numbers are identical to the IRS' FCS (the UST is a little more specific and breaks out certain IRS numbers better/differently, but they're the same numbers).
      Good to know -- thanks! I will be taking a look at those links, for sure.

      Originally posted by justbroke View Post
      You can use and should list your actual expenses. If those expenses exceed the FCS then you must provide a really good reason with really good documentation or perform the so-called belt-tightening and reduce the expense. (Remember that Schedule J is "forward" looking.). Even where you provide such additional documentation does not mean the UST will accept those numbers. In some cases the debtor withdraws (or reduces) the numbers to be within the standards (FCS) or they go to a hearing before the judge. Caselaw is pretty thorough on this.
      Schedule J is "forward" looking. I had not been looking at it that way -- I was thinking "current" and "past" looking, and using the averages I have on almost a complete year of monthly spending spreadsheets.

      Instead of showing "look at the mess we've made" -- I should be showing "look how this is even with belt-tightening". That is a more accurate look into the future... and there is a difference.

      Originally posted by justbroke View Post
      College (education) expense is scpecifically called out as a separate line item because it varies (there are so many differences between States that the FCS could never declare a number). Even then, education expense is limited (unless required by your job). The caselaw strongly suggests that a debtor that is insolvent shouldn't be attending college with loans or sending their children to private school (many cases hinge on education specifically).
      I have not been including the tuition we've paid, as that is not something we will be able to do in the future. My tuition will be paid through some other avenue -- whether it be student loans, 401k hardship withdrawal or loan, or a family member paying the school directly.

      I do have a category for the other misc college expenses that have come up -- exam fees, scrub shirt, study materials, etc. This averages $80/mo right now. So you're saying the attorney would probably just "tuck this in" some other category, because it would be objected to?

      I also just want to say that there are parts of this bk learning process that are just disgusting. It would be FINE for us to have a $1200/mo. mortgage -- but we have half that. It is FINE for us to have almost $1000/mo. car payments -- and, in fact, if needed, will help us "pass" the means test. But it's not okay for me to be furthering my education, heading down a new career path, making the Dean's list for the first time EVER, headed for a career which will help members of society for years to come. What is wrong with this picture?

      Originally posted by justbroke View Post
      The rest, pet care, gifts, are included in the miscellaneous portion of Food, Clothing and Other Expenses. They are just not broken out because there is so miscellany the IRS chose to deal in major categories. Some courts have found excessive smoking to be bad for the creditors (no joke) and that some courts will approve cessation programs but not someone smoking 3 packs a day in NYC (at $18 a pack).
      My tobacco expense is what it is, at this point ($96/mo). I am well aware that quitting smoking would give us money to use elsewhere -- and I am also painfully aware of the amount of money I spent on junk food and other dopamine-driven spending in the last 3 years I quit. Honestly it's probably a large part of our entire financial mess. So I'll leave that one alone and let them do whatever they need to do with that.

      Originally posted by justbroke View Post
      Schedule J is the gory detail.
      Gory. No doubt.

      Originally posted by justbroke View Post
      Every attorney will use a "budget" sheet and asks various things about how the family functions. You pay the attorney to then take those numbers and try to work. You will not get a line item for "vacation" but there is a line item on Schedule J titled "recreation." Again you must work within the FCS. Caselaw has shown time and time again that the court will not substitute you need for a vacation over that of your unpaid creditors. It's all about being reasonable. When I was in my Chapter 13 back in 2008-2010 we had a lot of fun with the $250/month allocation for recreation. We took very few "real" vacations (none I can even remember). We bought annual (seasonal resident) passes to Disney World and that was really worth it.
      I had a category called Entertainment/Recreation/Clubs/Books and I recently divided it out. $36/mo is what I would consider in this category, and the rest was the kids' sports: $153. We don't do much besides making sure they get to do their activities.

      Originally posted by justbroke View Post
      Bankruptcy is not about "anticipating" expense. It is about the expense you have at the time of filing (with a slight look to the future). While you can't budget an unexpected trip for a funeral into your Schedule J, you can make sure you're using all the money from the FCS for every category so that you have a cushion.
      Gotcha. Makes sense. Thanks again for all of the clarification!

      Comment


      • #18
        Originally posted by jbatt View Post
        Chrysalis Not at all! Good discussion. I only put $475 down for food (family of 5 but oldest daughter rarely eats at home -- college). We're truly in a pretty desperate financial situation, so all budget categories have been cut. I'm making my family eat leftovers and I'm buying less packaged food. This is really better for our diet and forcing us to get creative. For example, youngest daughter has learned to make scrambled eggs ;) And I'm very thankful for a neighbor with chickens who sells us a dozen free-range eggs for $1! New habits aren't easy to form, but we are doing a better job than I anticipated!
        Pretty sure jb is going to advise you to take the FULL allowance for food. Yes, you are living this way NOW, but don't paint yourself into a corner where you have no choice but to live that way FOREVER. As he has said, food is an allowed and justifiable expense, and it gives you some cushion for other areas and other things than can (and do) come up in life.

        Comment


        • #19
          Originally posted by Chrysalis View Post
          I do have a category for the other misc college expenses that have come up -- exam fees, scrub shirt, study materials, etc. This averages $80/mo right now. So you're saying the attorney would probably just "tuck this in" some other category, because it would be objected to?
          That's an education expense. You "could" claim that you are bettering your career so that you can earn more and pay creditors.

          Originally posted by Chrysalis View Post
          I also just want to say that there are parts of this bk learning process that are just disgusting. It would be FINE for us to have a $1200/mo. mortgage -- but we have half that. It is FINE for us to have almost $1000/mo. car payments -- and, in fact, if needed, will help us "pass" the means test. But it's not okay for me to be furthering my education, heading down a new career path, making the Dean's list for the first time EVER, headed for a career which will help members of society for years to come. What is wrong with this picture?
          You think that's weird. My mortgage payment, with arrears, insurance, and taxes was nearly $5,000/month. No problem. They complained about my $150/month cellular phone bill. Seriously! However, as I have read over 1,000 Chapter 13 case outcomes alone, the bankruptcy code is serious about allowing debtors to keep debt that is "necessary for the rehabilitation" of the debtor. Chapter 13 is a rehabilitation bankruptcy chapter which allows a debtor to reorganize and pay "some" or all of his/her creditors over time. What does this mean? Simply that you need a home and making you move could be detrimental, time consuming, and actually expensive. (If you were living in an apartment they would not be so nice.)

          Originally posted by Chrysalis View Post
          My tobacco expense is what it is, at this point ($96/mo). I am well aware that quitting smoking would give us money to use elsewhere -- and I am also painfully aware of the amount of money I spent on junk food and other dopamine-driven spending in the last 3 years I quit. Honestly it's probably a large part of our entire financial mess. So I'll leave that one alone and let them do whatever they need to do with that.
          Your tobacco usage is quite low. I know folks that spend $120/week (in Florida) on tobacco (3 packs a day/20 packs a week/2 cartons a week). In NYC that would be $360/week.

          Originally posted by Chrysalis View Post
          I had a category called Entertainment/Recreation/Clubs/Books and I recently divided it out. $36/mo is what I would consider in this category, and the rest was the kids' sports: $153. We don't do much besides making sure they get to do their activities.
          I used $75 per person for this category and the Trustee didn't bat an eye. I probably (maybe) could have done $100/month each.


          Originally posted by Chrysalis View Post
          Pretty sure jb is going to advise you to take the FULL allowance for food.
          I did in a different thread.
          Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
          Status: (Auto) Discharged and Closed! 5/10
          Visit My BKForum Blog: justbroke's Blog


          I am not an attorney. Any advice provided is not legal advice.

          Comment


          • #20
            Originally posted by kberly69 View Post
            This may be in no way helpful (and, I can't answer many of your questions), but I too spend a lot on food and we exceeded the allowance. I buy a lot of fresh food, we rarely go out to eat, and one of my daughters has celiac disease and the gluten free stuff is expensive (plus she eats like a horse- stays skinny too, for now). I have most of my receipts available through my primary grocery store's store rewards program. In going through it, I could eliminate some things as non-food to be put in the "clothing, laundry", "home maintenance/upkeep/repair" and "personal care" categories. It also made me realize I needed to budget better and shop smarter. [Side note: my other daughter just did a presentation on food waste and that was another eye-opener for me. Time to shop even smarter ;) ]
            Our family is gluten-free, also. We started with Paleo about five years ago, and everyone felt so much better -- we just couldn't add it back in. No, we don't buy a lot of the gluten-free packaged "replacement" junk. Only for special treats/occasions. But it just IS more expensive to eat this way. Yep, we've been buying hot dogs lately, but white bread? Nope. Not going there.

            I talked to the attorney about this and asked him what you would have to have as documentation to allow that extra 5% for food on the means test. He was a little puzzled (like no one had ever asked this before) and said he thought receipts would be fine. Ok, so... receipts just showing that we DON'T buy bread, pasta, ho-ho's and ding-dongs? Haha. I asked if you had to have an official diagnosis from the doctor (none of us do, but I have good reason to believe if I went back to eating gluten again, I might!) He said he didn't think so. Just receipts. I'd like jb's opinion on this one, as he's been around the bk world much longer than I have. (Although I don't think we are going to get down to needing that 5% for the means test, so it probably doesn't really matter. But I'm curious.)

            Originally posted by kberly69 View Post
            I recall agonizing over all this too but came to the realization that you need to be as accurate as possible, but also recognize that these forms don't allow you to give a 100% accurate picture since they aren't itemized to the micro-category and who keeps every receipt? Is vegetable gardening "food" or "entertainment"? Is flower gardening "home upkeep" or "entertainment" - or an unnecessary luxury? Where does dog food go? And, while we're at it, putting my rescued dog down as an asset felt weird... Are Christmas and birthday gifts "entertainment"? What about the various little things I'm sure I forgot I bought and had no receipts for? The first time I ran through my expenses, I had me spending more than I brought in, which wasn't possible since I had no credit cards or loans. It took some reworking but I feel like what I ended up with was as accurate as I could be. You have to learn to obsess just enough to be reasonably accurate but not so much that you're making yourself crazy.
            I'll just clarify since we can't read "tone" here -- I'm not agonizing or making myself crazy. This conversation just sparked some new thoughts and it's all good to know. My numbers are pretty darn accurate (I do go through every receipt and divide things out, which is not a big deal if you keep up on it daily or every couple of days). So I just started thinking, where is the line here? You want to be accurate... but not TOO accurate? You want to tell the truth... unless it looks bad? {confused smiley, lol} Hence the conversation.


            Originally posted by kberly69 View Post
            Another side note: I really felt the amounts for food allowance were low for a family who tries to eat fairly healthy. Hot dogs and white bread and are cheaper than chicken breasts and whole grains.
            Agreed. Wholeheartedly. And I find it to be really, really sad... knowing the difference that can be made in one's life with proper nutrition. We've kept all of our family members off medications for asthma and allergies by eating the way we do -- until recently. My youngest is having problems, and guess what? It's probably directly linked to our lower food standards lately. A $25 inhaler every few weeks is completely justifiable, but my grocery budget apparently is not. No, I don't need anyone to play a tiny violin... we're going to get this figured out. I'm speaking more to the "general" state of this country's nutrition standards, and the lack of importance these numbers indicate.

            Comment


            • #21
              Originally posted by Chrysalis View Post
              I talked to the attorney about this and asked him what you would have to have as documentation to allow that extra 5% for food on the means test. He was a little puzzled (like no one had ever asked this before) and said he thought receipts would be fine. Ok, so... receipts just showing that we DON'T buy bread, pasta, ho-ho's and ding-dongs? Haha. I asked if you had to have an official diagnosis from the doctor (none of us do, but I have good reason to believe if I went back to eating gluten again, I might!) He said he didn't think so. Just receipts. I'd like jb's opinion on this one, as he's been around the bk world much longer than I have.
              I actually had an issue with my case specifically around the 5%. I claimed the additional 5% because the Trustee claimed that my company was feeding me. I travel for work and, well, I do get to expense food. I had to back-out the meals from work which eliminated the (FCS) meal allowance for myself of about $185/month! In turn, I claimed the 5% because food on the road is more expensive than prepared meals. No questions asked.

              The key is documentation and consistency. The 5% is an easy hurdle but exceeding the entire food allowance would likely be met with a need for more than simple receipts.

              justbroke's humor:
              Trustee: Why do you need to eat 22oz rib-eye steaks every night?
              Debtor: My doctor said it keeps my blood sugars low.
              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog


              I am not an attorney. Any advice provided is not legal advice.

              Comment


              • #22
                Thanks again, jb for all of your input. Yes, love the humor! I'm not going to quote now, as we just had power to both bathrooms go out -- and I have to go try to figure that one out! None of the breakers are tripped. ???

                I'll just comment for now that yes, I suppose my tobacco is relatively low. That averages out to 8 cigarettes per day to help keep my sanity through all of this. ;)

                Comment


                • #23
                  So I just now got to explore the link with the standards. Am I understanding this correctly?

                  "Food, Clothing, and Other Items" is supposed to include the five categories they have listed there:

                  - food
                  - housekeeping supplies
                  - apparel & services
                  - personal care products and services
                  - misc

                  And is that "Misc" is supposed to include ALL of the things that there is no other category on Schedule J for?

                  So costs for the kids' school (books, field trips, etc), misc college expenses (as mentioned before), entertainment/recreation, tobacco, gifts, pet care -- these things are all expected to add up WITH those other four categories above, and be no more than the "standard" for a family of five?

                  If so ~ and maybe (hopefully) I am missing something ~ but if so, then there is no way to report even close to our actual expenses. For a family of five, this category is $1975.

                  Edited to say: Ok, I know there is a line for the kids' education expenses & entertainment. But still -- are all of these things supposed to add up to that standard?
                  Last edited by Chrysalis; 06-09-2017, 10:40 PM.

                  Comment


                  • #24
                    It's not that cut and dry. Think of the food, clothing and miscellaneous as your fixed or "entitlement" budget. It does cover a lot of things that you may believe are discretionary, but the IRS does not see it that way. They came up with reasonable expenses in this entitlement area. Think of these as mandatory expenses (cost necessary to "live" and you can read that as survive). Smoking is not really a "permitted" activity, so that must be included in the miscellaneous category. If you're feeding animals then you can try to include a line item for that but it can be questioned. Generally, the food, clothing and other is to cover most household related expenses.

                    The key is, max out the amounts for the Food, Clothing and Other on your Schedule J. Then attempt to add the "discretionary" spending such as miscellaneous items (smoking, pet care). The UST will usually -- but not always -- question these for over-the-median income filers and you may need to provide documentation. The key is always reasonable. Entertainment of $75/per person "may" be reasonable. Entertainment of $500/month for a family of five will likely peak the UST's curiosity.

                    You can have college (education) expenses if it is necessary for your job. Child care and child school expenses are also separate and allowed. Whenever you put money into those categories expect that you will need documentation (proof, not just documentation) of the expense. You can't "guess" that you will have to buy books for a child. You have to demonstrate the expense (but I have found that putting $50/month per child is not unreasonable and they didn't ask for documentation -- at least in my case).

                    The key here is that if you didn't have credit cards, what is a moderate amount of money (for certain categories) on which to live. The IRS believes they have covered almost every scenario for that non-discretionary spending. Gifts? I didn't give during my Chapter 13. Why? I can't afford to pay creditors, I can't afford to give gifts. It was easy math for me.

                    Remember it's not so much about your actual expenses than it is about calculating "reasonable" expenses given certain known parameters.

                    Are you filing Pro Se (you're posting in the Pro Se area). If so, the United States Trustee (UST) will definitely take you to task on exceeding the prescriptively reasonable (and quite frankly, the limits) amounts for the categories. For special circumstances, any category can be exceeded but that requires everything from "light" documentation to medical history (and a physician's memo).

                    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                    Status: (Auto) Discharged and Closed! 5/10
                    Visit My BKForum Blog: justbroke's Blog


                    I am not an attorney. Any advice provided is not legal advice.

                    Comment


                    • #25
                      Thanks jb. No, I am not filing pro se. Just posting here because that's where the link was and where the conversation started. I said I would look at those numbers, but didn't get around to it until tonight.

                      This has all been really helpful & I appreciate your time.

                      Comment

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